GLDD

We rate Great Lakes Dredge & Dock CORP (GLDD) as a Hold with a composite score of 54.5/100 at a current price of $16.93. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (79th percentile) and value (65th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (34th percentile) and investment (34th percentile) tempers our overall conviction. We assign a No Moat rating (24/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Great Lakes Dredge & Dock CORP holds a lower-quartile position (#44 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 54.5/100 places it at rank #1331 in our full 7,333-stock universe. At $815M in market capitalization, Great Lakes Dredge & Dock CORP is a small-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 15% and favorable momentum (79th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 22% (-1.5pp vs sector) narrow to operating margins of 13% (+5.8pp vs sector) and net margins of 8.1%, yielding a gross-to-net conversion rate of 37%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $16.93, Great Lakes Dredge & Dock CORP is trading near fair value based on current fundamentals. Our value factor score of 65/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 16.5x (roughly in line with the sector median of 19.1x), EV/EBITDA of 10.3x (near the sector median), P/B of 2.3x, P/S of 1.4x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Great Lakes Dredge & Dock CORP. The stock presents a balanced risk profile: significant leverage (152% debt-to-equity) and weak quality scores (34th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (152% debt-to-equity); weak quality scores (34th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 52th percentile and quality factor at the 34th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our medium uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Great Lakes Dredge & Dock CORP's capital allocation as Poor. Key concerns include elevated leverage (152% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Great Lakes Dredge & Dock CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Great Lakes Dredge & Dock CORP receives a Hold rating with a composite score of 54.5/100 (rank #1331 of 7,333). Our quantitative framework assigns a No Moat (24/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on Great Lakes Dredge & Dock CORP. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.